TaxTMI 
TaxTMI 
2023 (7) TMI 1606
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....dent Nos. 3 and 4. ORDER Per: Justice Tarun Agarwala, Presiding Officer 1. The appellant has challenged the order of Securities and Exchange Board of India ("SEBI" for convenience) dated December 15, 2022 whereby the representation in the matter of scheme of amalgamation/ arrangement between Indiabulls Real Estate Limited ("Indiabulls" for convenience) and Embassy Group Companies was decided. 2. The facts leading to the filing of the present appeal is, that Indiabulls Real Estate Limited Respondent No. 2 issued a corporate announcement on January 31, 2020 intimating the merger of Indiabulls and Embassy One Commercial Property Developments Pvt. Ltd. Subsequently, on August 18, 2020 Indiabulls made a disclosure to the Stock Exchange informing that the Board of Directors had approved a proposal of merger of NAM Estates Pvt. Ltd. Respondent No. 3 and Embassy One Commercial Property Developments Pvt. Ltd. Respondent No. 4 with Indiabulls Respondent No. 2. In this regard, Indiabulls subsequently made several disclosures from time to time with regard to the proposed scheme of arrangement. 3. Regulation 11, 37 and 94 of the SEBI (Listing Obligation and Disclosure Requirement....
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....f the order of NCLT, Chandigarh dated May 09, 2023 is extracted hereunder:- "11. As regards the objector's claim that it should be allowed to step into the shoes of the earlier applicant, i.e., Sh. Dhanekula Dharanish, from whom it has purchased the entire lot of 20,100 equity shares of the applicant company, it is noted that the original applicant did not meet the threshold limit of 10% of the shareholding for raising objections as stipulated under the proviso to Section 230(4) of the Companies Act, 2013. It is also noted that the amalgamation of companies results in competing interests and rights of different stakeholders, and in the interest of pragmatism, each and every stakeholder's whole interests are stated to be affected and cannot be entertained by the Tribunal. In normal circumstances, the provisions of Section 230(4) of the Companies Act lays down that the particular threshold of 10% of shareholding needs to be respected. Otherwise, small shareholders having been very minuscule stake in the company will have the potential to derail any amalgamation process and thereby affect the broader interest of the companies amalgamating. Furthermore, by just buying shares f....
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....e has a right to file an appeal under Section 15T of the SEBI Act and that he is an aggrieved person. It was urged, that the appellant had acquired the shares held by the original complainant and pursuant to the share purchase agreement all rights attached to the shares including the right to litigate vest with the appellant and, therefore, the appellant has the right to take appropriate steps to protect the value of the shares. It was also urged, that the scheme of arrangement is also regulated by SEBI under the LODR Regulations and Circulars issued by SEBI. Any contravention of the requirements contained in the LODR Regulations can be adjudicated by SEBI alone and, therefore, NCLT has no jurisdiction to adjudicate any violation of the securities laws. It was urged, that any failure by SEBI to exercise its jurisdiction in a just fair and reasonable manner would be subject to the jurisdiction of this Tribunal whose powers are coextensive with that of SEBI. It was also urged, that the forum of non-conveniens applies when two forums have jurisdiction and that in the instant case NCLT has no jurisdiction to adjudicate any violation of the securities laws and, therefore, this principle....
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.... date of receipt of the appeal." 14. A perusal of the aforesaid provision would indicate that any person being aggrieved by any order of the Board i.e. SEBI can prefer an appeal before this Tribunal under Section 15T of the SEBI Act. In the instant case, SEBI has passed an order deciding the representation and, therefore, the aggrieved person can file an appeal. 15. In the instant case, we find that DD had filed a representation complaining about the scheme of arrangement. This representation was disposed off by the impugned order and, therefore, in our view DD is the aggrieved person, if any, but DD has not filed the present appeal. The appellant having purchased the shares from DD in our opinion is not an aggrieved person who can file an appeal. 16. The appellant by purchasing the shares from DD does not step into the shoes of DD. He does not and cannot by law purchase the litigation. By purchasing the shares from DD, the appellant becomes a shareholder of the Company and derives such rights which a shareholder of a Company gets but such right does not include the right to litigate or to continue with the complaint. In our view, the transfer of shares from DD to the appe....
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....nuine grievance because an order has been made which prejudicially affects his interests". 20. The Supreme Court held that the test of an aggrieved person is that person who has a genuine grievance because an order has been made which prejudicially affects his interests. In the instant case, we do not find that the appellant has a genuine grievance nor do we find that it affects his interests. On the other hand, we find that he has purchased a litigation. In similar circumstances, this Tribunal in Sukumar Chand Jain v. SEBI & Ors. (2008) SCC Online SAT 50 held:- "...not only did he purchase the shares and become a shareholder of the target company for the first time after the public announcement, he also traded in those shares subsequently and his portfolio had swollen to 6190 shares as on September 29, 2007. Obviously, the appellant had purchased the shares only to litigate with the target company. We are satisfied that he has not approached the Tribunal with clean hands and must fail on this short ground." (Emphasis Supplied) 21. In view of the aforesaid, we are of the view that by buying shares from the earlier objector/ complainant on commercial consideration ....
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....nt, the valuation report, financial statements and abridged prospectus filed by Indiabulls Estate Limited suffer from non-disclosure of material information. Through this representation DD sought an independent valuation to be undertaken pursuant to SEBI Circular dated March 10, 2017. The principal grievance of the appellant is, that the impugned order has mechanically disposed of the complaint without giving any material reasons. It was contended that the scheme of arrangement is regulated by SEBI under the LODR Regulations and Circulars issued by SEBI and that any contravention of the requirements contained under the LODR Regulations can be adjudicated by SEBI alone and not by NCLT. 24. In this regard, it would be relevant to peruse Regulation 11, 37 and 94 of the LODR Regulations, which are extracted hereunder:- Scheme of Arrangement. 11. The listed entity shall ensure that any scheme of arrangement /amalgamation /merger /reconstruction /reduction of capital etc. to be presented to any Court or Tribunal does not in any way violate, override or limit the provisions of securities laws or requirements of the stock exchange(s): Provided that this regula....
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....y the Tribunal under section 31 of the Insolvency Code, subject to the details being disclosed to the recognized stock exchanges within one day of the resolution plan being approved. Draft Scheme of Arrangement & Scheme of Arrangement. 94. (1) The designated stock exchange, upon receipt of draft schemes of arrangement and the documents prescribed by the Board, as per sub-regulation (1) of regulation 37, shall forward the same to the Board, in the manner prescribed by the Board. (2) The stock exchange(s) shall submit to the Board its No-Objection Letter on the draft scheme of arrangement after inter-alia ascertaining whether the draft scheme of arrangement is in compliance with securities laws within thirty days of receipt of draft scheme of arrangement or within seven days of date of receipt of satisfactory reply on clarifications from the listed entity and/or opinion from independent chartered accountant, if any, sought by stock exchange(s), as applicable. (3) The stock exchange(s), shall issue No- objection letter to the listed entity within seven days of receipt of comments from the Board, after suitably incorporating such comments in the No-o....
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....n the scheme of arrangement and that SEBI had a limited role to play only with regard to the issuance of letter of observation or no objection certificate. 26. Having perused Section 230 of the Companies Act, 2013 and Regulations 11, 37 and 94 of the LODR Regulations, we are of the opinion, that the LODR Regulations as well as the Circular of SEBI dated March 10, 2017 does not contemplate the encroachment of NCLT's exclusive authority to sanction or reject the given scheme of arrangement. SEBI's/ Stock Exchange's role is limited to issue observation/ no objection letter to any proposed scheme of arrangement to the extent that the draft scheme of arrangement violates or does not violate any provisions of the securities laws. 27. We are also of the view, that while considering that this draft scheme of arrangement does or does not violate or override or limit the provisions of the securities laws or requirements of the Stock Exchange, the Stock Exchange and/ or SEBI cannot examine the fraud carried out by the Company in the scheme, documents or scrutinize the valuation report or determined the share exchange ratio as in our opinion, such aspect can only be considered by the NCL....
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....led by the claimants under the Act of 1988 was liable to be rejected and the same was rightly rejected by the Tribunal." 31. In Mr. Ashwani Minda & Anr. Vs. U-Shin Ltd. & Anr. (Delhi High Court) decided on 12.05.2020 the issue was whether a party has the right to approach the Court for seeking interim relief under Section 9 of the Arbitration and Conciliation Act, 1996 when the arbitral tribunal/ arbitrator has already declined to give the same interim relief. The Delhi High Court, held:- "the parties have consciously chosen to tread on a particular path and they cannot now turn back because they have been unsuccessful. The Court said that the Doctrine of Election will bar the applicant from seeking interim relief as the same issue has been raised before the Emergency Arbitrator. All the issues have been conclusively dealt by the arbitrator vide detailed order and applicants cannot be permitted to take a second bite at the cherry." "When the Petitioner has already invoked the mechanism of the emergency arbitrator and invited a detailed and well-reasoned order by the Emergency Arbitrator, it is not for them to take a second bite at the cherry. Therefore, Part-I ....